What Are the Best Saving Plan Options Available in India?

Posted by amrina alshaikh on June 27th, 2018

The insurance market is full of several life insurance policies. Here in India, life insurance policies are bought either for tax saving or as an investment when financial planning is considered. The most common types of savings plans in India are enlisted below. According to your risk appetite and future financial requirements, you can choose the best saving plan among them. Read further to know more.

Money Back Policies

Most of the people in India prefer money back policies because of the dual benefits offered by the plan, i.e. insurance cover and money inflows at fixed intervals. On the other hand, money back plans are nothing but endowment plans that offer periodic pay-outs during the policy tenure. People wanting money additionally, as regular income, can opt for these plans to meet their short-term financial goals.

In money back plans, a part of the sum assured is kept aside for the maturity benefit and the rest is paid out in the recurring way. In case of survival, the remaining amount is paid along with bonuses. The premium rates of money back plans are so high because in case of unfortunate demise of the life insured, the full sum assured is paid regardless the recurring pay-outs made previously. Also, the bonuses are calculated on the entire sum assured.

Endowment Policies

Endowment policies are designed to help you build a corpus along with the assured maturity benefit and additional bonuses if any. Endowment policies are considered to be one of the best saving plans in India due to the returns gained. These plans also enable you to combine your policy with the riders that provide additional coverage in certain cases. 

Endowment plans provide life cover for a definite period. At the end of the policy tenure, you will get the sum assured and accumulated bonuses. In case of unfortunate demise, the beneficiaries of the policy will get death benefits i.e. sum assured and bonuses accrued. It is seen that endowment plans are costly as compared to whole life of term insurance plans.  

Unit Linked Insurance Plans

ULIPs are best suitable for those who are seeking the plans offering both life cover and opportunities to create wealth. A part of the premiums paid is kept aside for life insurance and the rest amount is invested in market linked funds, which further helps you build a good corpus. Since ULIPs are market linked, the returns are depending on the market performance. One can say that ULIP is the best saving plan because it enables you to choose the fund in which your money will be invested, according to the your risk appetite. 

Apart from all these options, it is always seen that which plan is best for tax saving. Life insurance policies. Premium amount up to Rs.1 Lakh is tax-free under Section 80C of Income Tax Act. Also, you can avail tax benefits on maturity and death benefits under Section 10(10D) of Income Tax Act. Analyse your financial needs carefully and choose the best saving plan that suits your requirements.